US hotel industry has poor November

Heavy discounting led to a fall in the overall business health of the US hotel industry last month.

Room rates, revenues and occupancy levels combined fell by 1.8% in November overall, compared with just 0.1% in October, according to data from Smith Travel Research and e-forecasting.com.

It was hoped that the slight fall in October heralded a turning point for the sector, which has suffered badly this year.

The latest monthly change dragged the Hotel Industry Pulse (HIP) index to a reading of 79.9 – compared to a base of 100 in 2000.

The news comes just days after an annual review of global hotel investment deals showed the market has slumped by 64 per cent this year – but is expected to rebound in 2010. 

“As noted last month, what we are seeing now is that the hotel industry recovery has gone flat.

“It seems that the industry, although we are not seeing major declines again yet, is levelling out at very low levels,” said Maria Simos, chief executive of e-forecasting.com. 

Looking at HIP’s six-month growth rate, which historically has signalled turning points in U.S. hotel business activity, it worsened from the previous month, with a reading of -9.3% compared with -8.7% in October.

As a benchmark, March had been the worst month of the cycle when the six-month growth rate hit -23.4%.

This compares with a long-term annual growth rate of 3.2%.

Chad Church, industry research manager at STR said:

“Although November demand performance was affected by calendar comparisons to 2008, the revenue input continues to drag the HIP index in negative territory.

“Discounting and the subsequent revenue losses are primarily to blame for this month’s result.”

There were only eight weekend days in November 2009 compared to nine weekend days in 2008, which may have affected the result.

The HIP index tracks monthly overall business conditions in the industry and comprises revenues from consumers staying at hotels and motels adjusted for inflation, room occupancy rate and hotel employment, along with other key economic factors which influence hotel business activity.